• Investment in shares by Govt servant

Hello sir, 
I am a govt employee and have come to know that being a govt. servant I can not trade in shares and also if my transaction in shares exceed my six month basic pay I have to inform this to the dept. in a prescribed form. Since I am a frequent investor my investment is likely to increase the said limit. Suggest can I trade in the name of my mother (hosewife) or wife (housewife) after marrying and how?
Asked 4 months ago in Taxation

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32 Answers

You can invest in shares but have to disclose this to the department if there are rules pertaining to it. Otherwise not. Departmental rules would be helpful in this regard.

The IT department already knows.

Rahul Mishra
Advocate, Lucknow
11560 Answers
20 Consultations

5.0 on 5.0

If you are performing trading daily transactions or weekly basis then its called as trading and that is banned for government employee.

 

If you're purchasing for long-term goal as a Investment on yearly basis to save Income tax than its not banned.

 

But if you still wants to trade on daily basis then you can trade on your mother' or wife's name.

 

But if you have siblings then don't trade on your mother's name.

Ganesh Kadam
Advocate, Pune
11668 Answers
109 Consultations

4.9 on 5.0

Hello, 

Yes you can invest the amount on their name. 

They are separate legal entity and hence no specific formality is required. 

 

Regards 

 

Anilesh Tewari
Advocate, New Delhi
17847 Answers
312 Consultations

5.0 on 5.0

Yes you can trade but only in their individual dmat accounts

Prashant Nayak
Advocate, Mumbai
22417 Answers
49 Consultations

4.4 on 5.0

Your mother is at liberty to carry on trading in shares 

 

you should not carry on trading of shares in your name or that of your wife 

Ajay Sethi
Advocate, Mumbai
79294 Answers
4742 Consultations

5.0 on 5.0

Dear Sir,

Trading in somebody else's name is like a backdoor entry. You can always do it, but in the eyes of law it will considered that all those shares are that other person's property and not yours.

If you trade in your mother's name, your siblings will have a legal right to claim a share after her death. Whereas, if you trade in your wife's name, you will not be able to recover that money in the unfortunate event of there being a dispute between both of you in future. 

Also, if you trade in your mother's name or wife's name. You have to file ITR in their names for the earnings and also show some source of income (because otherwise from where is the housewife getting money for regular trading?)

 

Hope this helps.

Best wishes.  

Agam Sharma
Advocate, New Delhi
553 Answers
4 Consultations

5.0 on 5.0

Dear Sir,

It is always safe to trade on the name of mother or wife as applicable but keep the works under your control. 

Ganesh Singh
Advocate, New Delhi
6512 Answers
13 Consultations

4.5 on 5.0

Service rules say no government servant shall speculate in any stock, share or other investment. So to avoid violation of service rules, investment is made in the name of wife/family relative etc. 

Can do or cannot. Just keep it secret.

Yogendra Singh Rajawat
Advocate, Jaipur
21402 Answers
31 Consultations

4.4 on 5.0

Please refer to section 35(1) , 40 of CCS Rules, 1964 .

This clearly mentions under what limited circumstances the government servant can trade in stock markets. 

However your case , I regret, doesn't come under those circumstances. 

Devajyoti Barman
Advocate, Kolkata
21680 Answers
311 Consultations

5.0 on 5.0

. As per Central Civil Services conduct rules, A government employee can invest in shares, debentures and mutual funds. 

- There is no limit on investing in mutual fund , but as per rule , all government employees need to send an intimation if total transactions in shares, securities, debentures, mutual funds scheme exceeds six months' basic pay during the calendar year.

- If, you are investing maximum amount in the mutual fund etc, then you should to take help of a C.A. for disclosing the same as per rule. 

- Yes, you can trade in your relative name freely. 

Mohammed Shahzad
Advocate, Delhi
5531 Answers
51 Consultations

5.0 on 5.0

You are right that a government employee cannot indulge in stock market trading activities.

You can stop trading from your demat account, you can open a demat account on yor mother's name or your wife's name and do the trading activities without letting know anyone about your indulgence in it.

T Kalaiselvan
Advocate, Vellore
69328 Answers
929 Consultations

5.0 on 5.0

you may invest with your mother or wife name it is safe, as a govt employee you are not entitle to do like this business hence you may close the account and open with your blood related and your dependent.

Krisshnan K P
Advocate, Tiruchirappalli
3 Answers

Not rated

1. See you may open a trading account in name of your spouse or mother and may do the transaction in same and on the end of the financial year they may file their tax returns showing these transactions. 

Shubham Jhajharia
Advocate, Ahmedabad
25513 Answers
111 Consultations

5.0 on 5.0

1. There is no ban on Govt employees in making investments in shares.

 

2. However, you shall have to follow the service conduct rule and inform your employer about the said investment in prescribed form.

 

3. It will be prudent on your part to make the said investment in the name of your mother presently and in the name of your wife after your marriage.

 

4. Making investments and earning profits in the name of your mother and/or wife will reduce your Income tax liability also.

Krishna Kishore Ganguly
Advocate, Kolkata
24708 Answers
701 Consultations

5.0 on 5.0

Dear Client

This is to inform you that, there is no absolute ban on investing in stocks however speculative trading (may include derivative trading) is not allowed. As per Rule 16 of the CCS (Central Civil Services) conduct rules 1964, investments in shares, debentures and mutual funds can be made by the Government servant. However, "frequent buying and selling" of these are considered as "speculation" and is banned. Also, for transactions above certain value, the government officers have to inform prescribed authorities.

Also, Investment in shares, mutual funds etc are to be intimated to the Department at the end of every calendar year as per the DOPT OM No. 11013/6/91-Estt. (A) dated 8.4.92 regarding CCS [Conduct] Rules, 1964Transactions in sale and purchase of shares and debentures etc.

According to Sub Rule (2) of the Rule 16 you cannot trade in the name of your mother or your housewife as well. The rule states that “No Government servant shall make, or permit any member of his family or any person acting on his behalf to make, any investment which is likely to embarrass or influence him in the discharge of his official duties. For this purpose, any purchase of shares out of the quotas reserved for Directors of Companies or their friends and associates shall be deemed to be an investment which is likely to embarrass the Government servant.”

Pulkit Prakash
Advocate, Delhi
309 Answers
7 Consultations

5.0 on 5.0

you can trade by the name of any member of your family i.e. wife, son, daughter, mother, father or brother.

Mohammed Mujeeb
Advocate, Hyderabad
18935 Answers
11 Consultations

4.5 on 5.0

Your father can transfer some funds to your mother account 

 

2) your mother can carry on trading in shares file income tax returns for her income from trading 

 

3) you cannot carry on trading in your account t 

 

4) disciplinary action can be taken against you by the department 

Ajay Sethi
Advocate, Mumbai
79294 Answers
4742 Consultations

5.0 on 5.0

See when you trade in her name then you need to show that her income as she is a different individual. Housewife can be a share trader and you need to show her self employed

Prashant Nayak
Advocate, Mumbai
22417 Answers
49 Consultations

4.4 on 5.0

Q.if I trade in my mother ( housewife) name knowing what you have told then how can I show her income, also can a housewife trade with her husband income because she also have a right over her husband income?

A your wife have a right over your income it is natural, but you may create her income individual earnings by filing of income tax
returns and you may create a loan from others and to trade.

Q If not then can I trade with my own demat account without knowledge of my dept? Or
by becoming as a HUF member since I am an individual taxpayer?

A. by legal terms if your found by your department you will be punishable and it is not advisable
you mare create a HUF it is possible

Krisshnan K P
Advocate, Tiruchirappalli
3 Answers

Not rated

1. Yes you may transfer amount to wife's account from same she may trade. See in case you do frequent trading from your account and the department is informed of same they may take steps against you as per rules. The best way is to do it in name of family member.

Shubham Jhajharia
Advocate, Ahmedabad
25513 Answers
111 Consultations

5.0 on 5.0

Dear sir,

There are many tricks to show regular individual income. For eg. You can show that earns some money by taking tuitions, having her own business of stitching and sewing, rental income etc. 

Housewife has right to maintained out of husband's income not to carry on trading. Money received from husband is not "income" for tax purposes.  Also, in that case you'll ultimately be showing that your money is being used for trading. 

Your Demat a/c would be linked to PAN - which is linked to Aadhar. It's very easy to find out the truth if there is some inquiry against you. So to be on a safer side don't use your own account. 

Best wishes. 

Agam Sharma
Advocate, New Delhi
553 Answers
4 Consultations

5.0 on 5.0

You can create a HUF and open a demat account in the name of HUF then the trading activity can be done through that account. 

Your wife can always get money from you and can invest in stock market on her name and can also indulge in trading activity. 

T Kalaiselvan
Advocate, Vellore
69328 Answers
929 Consultations

5.0 on 5.0

file itr for your wife of last two years for which the last date is extended now....

than start on her name

Rahul Jatain
Advocate, Rohtak
5364 Answers
4 Consultations

4.8 on 5.0

All your actions as suggested by you is potential to attract disciplinary proceeding.

So you are free to trade at the cost of your job. 

Devajyoti Barman
Advocate, Kolkata
21680 Answers
311 Consultations

5.0 on 5.0

You can have trading account on your mother's name.

Ganesh Kadam
Advocate, Pune
11668 Answers
109 Consultations

4.9 on 5.0

Account should open in her name only and wife can use husband income and to make full proof, also guide her so that she can have some knowledge of what you are doing on her name.

Secretly you can do by yourself or in your wife name. Thing is same.

Yogendra Singh Rajawat
Advocate, Jaipur
21402 Answers
31 Consultations

4.4 on 5.0

Dear Sir, 

out of various options available, is suggested that you may trade through HUF as well, but the trading through mother and wife will also not be harmful because you may give money to your mother/wife for their better and they may invest that money. 

Ganesh Singh
Advocate, New Delhi
6512 Answers
13 Consultations

4.5 on 5.0

You can go ahead and trade with your wife account. 

 

 

Regards 

Anilesh Tewari
Advocate, New Delhi
17847 Answers
312 Consultations

5.0 on 5.0

 

You can open an account in your mother's name but you cannot link your bank account to her trading account. 

Mohammed Mujeeb
Advocate, Hyderabad
18935 Answers
11 Consultations

4.5 on 5.0

- Legally , your wife's income will come under the family income from all sources as per Income tax , whether you form HUF or open a demat account in her name, since she is a house wife. 

- However , your wife can trade after taking amount in the name of maintenance .

- Further, if you will trade from your own demat account , then in future you may face consequences ,if it came to the knowledge of your department . 

- Hence, you should take permission from the departmental head after giving an application for the same. 

- Many government official are engaged in the trading after getting property approval , because it not come under dual employment , which is prohibited . 

Mohammed Shahzad
Advocate, Delhi
5531 Answers
51 Consultations

5.0 on 5.0

1. Yes you can trade in Shares from your personal account but you have to disclose your investments to your department.

2. Yes you can trade from your account of your mother or your wife by opening account of their name and using their trading account.

Mohit Kapoor
Advocate, Rohtak
10685 Answers
7 Consultations

5.0 on 5.0

You may give your wife some seed money ie for her expenses etc. She should start form that money. She may also show that she received some money from her parents. In this way the income generated from trading would be entirely separate.

Rahul Mishra
Advocate, Lucknow
11560 Answers
20 Consultations

5.0 on 5.0

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